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More on the train wreck that is oral agreements


I wrote an article a few days ago regarding the enforceability of oral agreements, and then like clockwork, two days later, I have a client ask me if their oral agreement is enforceable. Now, this was quite disconcerting for the starving artist author in me who was sad to see that his voice had not yet been heard. It was, however, pretty good for the attorney in me who was pleased to have recently researched his clients question and responded with Usain Bolt speed to the query. The client did have an interesting side question regarding oral agreements that I did not reference in my previous post, so I thought I’d discuss.

What about if you have a written contract, but then you also had oral promises that were part of the deal? A contractor agrees to do work for $5000, you demand a little bit more work, he agrees to do it for $5500. The $5500 makes it into the contract – of course – but the extra work does not. Enforceable? Not generally, due to what is called the parol evidence rule.

The parol evidence rule means that no verbal agreement between the parties to a written contract, made before or at the time of the execution of such contract, is admissible to vary its terms or to contradict its provisions. Essentially, it protects people from lying about the terms of the contract which is right there on paper for everyone to see. But there are some negative consequences like our $5500 example above.

One key element, is that the verbal agreement only is not admissible if it was made before or contemporaneous with the written contract. So a later verbal modification to a written contract could be okay (assuming there was adequate consideration involved, which I also have written about in the past).

Another exception is that if there is fraud or mistake involved and to not admit the evidence would not reflect the true intention of the parties. This sounds great, but is of course very hard to prove, just as is fraud. Fraud is a word that is often thrown around in everyday speech but the legal aspect of it is very specific and tough to prove. The other main exception is that you can use extrinsic evidence to interpret ambiguous terms in the written contract.

Again, moral of the story, get a written enforceable contract, and things are always a lot easier.

Maginnis Law, PLLC is a Raleigh, NC-based litigation firm that practices primarily in Cary, Apex, Holly Springs, and the rest of Wake County and the Triangle region. If you have a contract dispute, contact Edward Maginnis at 919-526-0450 or visit our website at www.maginnislaw.com

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